Sorry, Obama Fans: Reagan Did Better on Jobs and Growth

Supporters of President Barack Obama, such as one of his campaign donors Robert Deitrick, an Ohio financial advisor often quoted in Forbes and elsewhere, insist that the Obama economy has been much more robust than Ronald Reagan's. Are they right?

Let's look at some numbers. President Reagan entered office in a period of high inflation which was stamped out by high interest rates that in turn led to the 1982 recession. His job-creation record after that may fairly be termed outstanding: nearly 20 million more Americans were employed when he left office than when the recession ended. Overall, including the recession on his watch, Reagan's net job growth over eight years was 16.1 million.

Barack Obama entered office in different circumstances: He inherited a recession that was already well underway, which ended much earlier in his presidency than did the Reagan recession. If you think of the economic cycle like a bouncing ball, Obama entered office just as the ball was about to strike the pavement. The bounce, though, has proceeded in agonizingly slow motion. Some eight million jobs have been created under Obama since the mid-2009 end of the recession, with a net gain of about five million. Charting Obama and Reagan's job-creation against overall U.S. population increases makes the picture look even worse for Obama, and the Reagan-era U.S. had a much smaller population. At any rate, more people have been added to the food-stamp rolls than the job rolls under Obama.

It's misleading to compare employment rates during the two presidencies. Imagine 90 out of 100 people are employed, and because the economy looks like it's picking up more steam 10 more people enter the workforce. If nine out of ten of them find jobs, the unemployment rate doesn't go down at all, yet ten percent more people are employed.

Reagan's economy was so strong that, for the last three-quarters of his administration, Americans were flooding into the workforce. Under Obama, the opposite has happened, and those who have given up on working aren't counted as unemployed. Even today, more than five years into the tepid recovery, labor-force participation remains at its lowest level since 1978. Don't blame waves of retirement for that fact: the Census Bureau reported that, from 2005 to 2010, older Americans actually became more likely to be employed. The percentage of 65-69 year-olds remaining in the workforce jumped from 26 percent to 32 percent over a ten-year-period ending in 2012. Among those 70-74 the jump was even more startling: from 14 percent to 19.5 percent. Meanwhile workers in the prime of their lives have simply left the playing field.

How about overall growth? GDP under Reagan was turbocharged compared to the Obama years. The Reagan years brought annual real GDP growth of 3.5 percent -- 4.9 percent after the recession. In inflation-adjusted 2009 dollars, GDP jumped from 6.5 trillion at the end of 1980 to 8.61 trillion at the end of 1988. That's a 32 percent bump. As Peter Ferrara pointed out on Forbes, it was the equivalent of adding the West German economy to the U.S. one.

Under Obama, GDP up to June 30, 2014 has grown an anemic 9.6 percent,
total. Reagan-era growth was far more than double the Obama rate.

Ah, but did all of that Reagan bounty trickle down to ordinary Americans, though? Yes. Real (inflation-adjusted) median household income shot up some ten percent in the Reagan years. It has flatlined under Obama.

English: Barack Obama delivers a speech at the University of Southern California (Video of the speech) (Photo credit: Wikipedia)

How about Reagan's spending record? Contrary to myth, and despite the opposition of a Democratic House of Representatives for his entire administration, Reagan achieved a reduction in federal spending as a percentage of GDP. That's including his famed military buildup often credited with ending the Cold War and hence delivering the "peace dividend" that helped dampen federal spending in the 1990s, in which Reagan economic policy largely stayed in place. Spending fellfrom 22.9 percent of GDP to 22.1 percent in 1989, whereas under Obama it has hit as high as 25 percent and has steadily hovered above 24 percent. Total accumulated debt was at 53 percent of GDP when Reagan left office. Today it is at 102.7 percent of GDP, a level unprecedented since WW II. The debt has exploded by 66 percent in the Obama years.

Does a president control the economy like a puppeteer? No, nor does a president have the power to spend; that's a Congressional duty. Nevertheless, to argue that the economy is doing better under Obama than it did under Reagan is at best obtuse and at worst partisan hackery.

I am a current-affairs columnist and film critic for The New York Post, for which I have covered everything from political conventions to film festivals. I have also contributed reviews and essays to The Wall Street Journal. Follow me on Twitter: @rkylesmith.